Cisco Systems, the San Jose-based networking giant led by CEO Chuck Robbins, said it will cut nearly 4,000 jobs as it pivots more aggressively toward artificial intelligence, after a fiscal third-quarter report that beat expectations and sent its stock sharply higher in after-hours trading. The move, which the company frames as redirecting resources to higher-value AI opportunities, comes alongside record revenue and modest beats on earnings per share. The announcement and the numbers have sparked debate about how big tech balances short-term headcount moves with long-term investment in AI.
Cisco announced plans to reduce its global workforce by fewer than 4,000 roles, a reduction that the company estimates amounts to under 5% of employees worldwide. The market reacted quickly, pushing shares up roughly 20% after hours as investors digested the twin messages of cost discipline and a technology pivot. For a company headquartered in San Jose and long synonymous with enterprise networking, the cuts underline how the AI shift is reshaping priorities across the tech sector.
The company has framed the layoffs as part of a broader strategy to position itself for the AI era by concentrating capital and talent where demand and value are highest. That means reallocating budgets and projects toward AI-related products and services, and away from areas seen as less central to future growth. Cisco’s leadership says this will make the company more competitive in a market increasingly driven by AI-enabled infrastructure and software.
“I’m confident Cisco will be one of those winners. This means making hard decisions,” Chuck Robbins said. The CEO’s words were delivered alongside financial results that painted a picture of a company at a crossroads, balancing operational discipline with an aggressive pursuit of new technology opportunities. Robbins’ message was clear: the company expects short-term pain to enable longer-term positioning in AI.
“With this, we are making changes today that will result in the reduction of our overall workforce in Q4 by fewer than 4,000 jobs, representing less than 5% of our total employee base.” That statement lays out the scale and timing of the reduction without disguising its human impact. Cisco is signaling that the changes are deliberate and measured, designed to minimize disruption while shifting resources into strategic priorities.
Financially, Cisco posted a record quarter with revenue of $15.8 billion, topping the $15.56 billion analysts had expected, while adjusted earnings per share came in at $1.06 versus $1.04 anticipated. Year-over-year, revenue rose about 12% from $14.15 billion in the same quarter last year. Those figures gave management room to claim that the company is financially healthy even as it makes structural changes to align with AI-driven demand.
Corporate reactions to the announcement have been mixed: investors liked the clarity and discipline, while employees and industry watchers weighed the human costs and the message it sends about the future of work at legacy tech firms. For some, Cisco’s move is a rational reallocation of scarce engineering talent and capital toward AI workloads that will likely command higher margins. For others, it is another reminder that the AI transition will be disruptive for many workers across the industry.
Looking ahead, Cisco plans to funnel the freed-up resources into areas it believes will deliver the highest returns in an AI-first world, including software, services, and AI-capable infrastructure. The company has not said exactly which teams will be expanded or how quickly hiring will resume in those priority areas, but the intention is to accelerate investments where customer demand is strongest. How smoothly Cisco manages that shift will shape its competitiveness and culture in the years to come.
Cisco’s slated layoffs represent roughly 5% of the company’s global workforce. (David Paul Morris/Bloomberg via Getty Images)
